Business Management Dynamics

Vol.1, No.8, Feb 2012, pp.34-44

Role of Benchmarking in Total Quality Management: Case of Telecom Services Sector

of Pakistan
Faiza Sajjad1 and Dr.Shehla Amjad
Abstract
The main purpose of this paper is to present the importance of benchmarking in Key words: Benchmarking,
TQM and organizational performance. To determine the various benefits an Total quality management,
organization can derive from the application of total quality management Quality outcomes/benefits,
practices, or the relationship between total quality management and quality Pakistan, telecommunication
outcomes/benefits in services sector of telecom industry of Pakistan. The study industry.
is based on primary and secondary data. Eight most important constructs were
found through literature review for conceptual framework in this study.
Available online
Primary data is collected through questionnaires. The same questionnaire was
used in comparison of TQM practices in different countries such as India, USA,
www.bmdynamics.com
Mexico, China and Norway. The theoretical framework adopted is by ISSN: 2047-7031
Raghunathan et al. (1999). Findings revealed that TQM practices and
implementation have positive effects on quality benefits or outcome
(productivity, profitability, competitive position, reduce customer complaints,
cost reduction, reduce rework level, reduces scrap level, stay in business) in
services sector of telecom industry of Pakistan. Benchmarking also plays a
significant role in the development of organizations. In addition to the research
data, findings from different field studies and other research works have further
supported conclusion drawn from this research, that TQM practices have
positive effect on organizational development. The findings based on this
empirical research would be useful to both decision makers and researchers.

INTRODUCTION
Benchmarking is an important strategic tool of total quality management (TQM). Benchmarking enhances
transparency and performance after entering the public domain (Braadbaart, 2007).For the
implementation of TQM factors within corporations, according to Yusof and Aspinwall (2000), that one of
the most influential factors in ensuring TQM adoption success was the formulation of a sound
implementation framework prior to embarking on such a change process.
A benchmarking is classically seen as “a tool to improve organization’s performance and competitiveness
in business life” (Kyro¨, 2003). Benchmarking should be a reference or measurement standard for
comparison; a performance measurement that is the standard of excellence for a specific business; and a
measurable, best-in-class achievement (Punniyamoorthy and Murali, 2008). More than 40 definitions have
been given to the term “benchmarking” (Wong and Wong, 2008). Benchmarking is a strategic tool for
performance assessment and continuous improvement in performance (Lee et al., 2006),
Service benchmarking is made more difficult than benchmarking in manufacturing because it appears
that the parameters that are important to the customers may differ significantly from one service industry
to another (John and Eeckhout, 2006).
The roots of TQM can be traced from production quality control ideas early in 1920. Total quality
management (TQM) was initially developed in Japan, and its origins can be traced in the work of the
Juran (1989,) Deming (1986), Ishikawa (1985) Feigenbaum (1983) and Crosby (1979) and on the rise a nd
dominance of the Japanese automobile industry in the world markets.
TQM is a description of the attitude, behaviors and culture of the organization that aims to provide
quality products and services to its customers and satisfy their need. The culture requires quality in all
aspects of the organization’s operations, with things being done right the first time, and waste and defects
eradicated from operations.
TQM is a management philosophy that seeks to integrate all organizational functions to focus on meeting
customers’ needs and organizational objectives (Hashmi, 2000 & 2004).

1
E.Mail: faiza@ciit.net.pk

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Different researchers have different findings, related to effects of TQM practices and implementation. A
number of researchers concluded that TQM implementation has effect on firm’s business performance,
whereas others stated that it does not lead to improvements in firm’s business performance. According to
Harnesk and Abrahamsson (2007), TQM has imbedded contradictions, for example manipulation versus
empowerment, collectivism versus individualism and standardization versus innovating learning. But
now a days mostly researcher emphasis on quality management programs for organizational
development and getting maximum output in this competitive world. According to their point of views
and findings, an effective model of success for companies is total quality management, which is customer
centric set of management policies that deliver quality to maintain a sustainable competitive edge.
During the 1980s and 1990s, TQM was widely seen as a revolution in management and began to influence
national business systems .TQM is often referred as a social movement in the literature. (Hackman and
Wageman, 1995). According to (Samir Baidoun, 2003) factors such as benchmarking. Top management
commitment, leadership, people management, strategy, policy, partnership, management of processes
and resource management are generally considered as the initial inputs to the implementation process of
TQM
TQM can be defined as a holistic management philosophy aimed at continuous improvement in all
functions of an organization and satisfied customer’s need and requirements by providing quality
services under the leadership of top management. (Demirbag et al., 2006).
According to (Jung-Lang-Cheng, 2008) TQM and benchmarking emphasize on product quality index
along with follow up action for evaluation system, and TQM also emphasizes the correct action to reduce
defect rates.
(Saravanan & Rao., 2007) studied that effective implementation of TQS, continuously increase quality and
performance of an organization. According to (Sharma & Hoque, 2002; Kanji & Sa 2007) public sector
organizations adopted and practiced TQM for continuous improvement.
In this study we have identified eight basic pillars of TQM through literature review and role of
benchmarking in TQM and its impact on organizations.
o Benchmarking
o Top management commitment
o Strategic quality planning process
o Quality information and analysis
o HRD
o Quality assurance
o Customer focus and satisfaction
o Public responsibility
To promoting organizational commitment top management commitment will be helpful (Everett, 2002;
Buch and River, 2002). In a global market the success of organization will depend on the abilities of
quality leader or managers in terms of teamwork, knowledge, skills and problem solving. According to
(Karia and Assari, 2006; Chang, 2006) in pursuit of continuous improvement TQM philosophy
emphasizes the role of internal and external suppliers, involvement of employees and customers.
Performance methods and performance measures favored by TQM adopters are studied in eight
domains: production, finance. Employee relations, market, quality of product and services, quality of
suppliers’ products and services, productivity and customer satisfaction.(V. Kumar, 2008).Different
writers and Quality gurus strongly emphasize the importance of strategic planning process based on total
quality (Deming, 1986; Oakland, 1993; James, 1996; Ahire et al., 1996; Sinclair and Zairi, 2001; Dayton,
2001; Martinez-Lorente et al., 1998; Sureshchandar et al., 2001; Crepin, 2002; Hitchcock and Willard, 2002).
Because strategic planning process for TQM always helpful for implementing and practicing TQM
principles effectively.Dervitsiotis, (2000) states that it is noticeable that not only consulting firms but also
organizations such as the American Productivity and Quality Centre, and the European Foundation for
Quality Management are seriously engaged in the promotion of and training in benchmarking as a
fundamental approach to achieve business excellence.
A large number of world economies are going toward on reform paths over the past decade. The global
telecommunication market is dynamism and is widely attributed to rapid technological development. It

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witnessed significant expansion of telecommunication networks and striking improvements in quality.

However sudden growth in subscriber base in Pakistan has caused network congestion and service
quality problems. Pakistan is still an unsaturated market and with falling cost of handsets there are large
numbers of new subscribers to compete for, especially in the rural areas. But eventually, as in saturated
markets, if mobile operators want to avoid simply competing on price, they will have to compete on
superior service, innovative features and ease-of use. Mostly, telecommunication organizations in
Pakistan just concentrate on marketing strategies and spend large amount of money on advertisement
and marketing tools. Marketing strategies are useful but most important and sustainable factor for
growth and profitability is practicing and managing quality programmed, providing quality services so
TQM become important factor for innovation cost reduction or cost effectiveness and profitability in long
run.

RATIONALE
In the present study the attempt has been made to assessing benefits and effectiveness of utilizing Total
Quality Management (TQM) system and role of benchmarking in TQM. The research aims to know the
various benefits an organization can derived from the utilization of total quality management and to
identify the weak areas for TQM practices in telecom industry of Pakistan and try to improve them.
Further also suggest that the results are quite generalist and they can be applied to the markets and
telecommunication industry of other countries as well, particularly those which have same culture,
traditions and values like India Bangladesh, Maldives, Sri-Lanka etc. To attain a firm grip over the market
share many organizations in all over the world are making use of quality information and related systems
to enhance quality of products and services.

OBJECTIVES
The main purpose of this research is:
1) To assess the effects of TQM factors on overall business performance in Services sector of Telecom
industry of Pakistan.
3) To assess the significance of TQM variables or principles for organizational development

HYPOTHESES
In the light of above objectives the following hypotheses are:

H1: TQM principles help to enhance performance of an organization in services sector of telecom
industry of Pakistan.
H2: The extent of use of benchmarking is significantly related to the quality
H3: Benchmarking also leads to customer satisfaction.

RESEARCH METHODOLOGY
In this study, the questionnaire survey was used to obtain information about TQM practices and overall
business performance from different telecom companies in Pakistan (PTCL, Mobilink, Telenor, Warid,
and U-phone). That data was used to examine the effects of TQM practices on the development and
performance of these companies. The type of samples and the number of organizations were determined
on the basis of meeting the information and requirements for the research. The survey instrument
adopted in this research was a pre-tested questionnaire with some modifications that were suitable for
this study. The theoretical framework by Raghunathan et al (1999) was adopted in this survey. The
questionnaire was previously used in comparison of quality management practices in different countries
such as the India, USA, Mexico, China, and Norway. The questionnaire consisted of 53 related questions
in nine categories. These categories correspond to the US Malcolm Baldrige National Quality Award
(MBNQA) criteria, which has been used for the evaluation of quality management in many of US
organizations (Pannirselvam et al., 1998).
There were 105 respondents and majority was related to top, middle management and supervisory level.
The items were written in the form of statements to which the respondents responded using a five-point
Likerts type scale (ranging from very high to very low). The research questionnaires were sent to human

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resource management department in the sampled organizations; because HRM department was dealing
with these type of matters in these organizations not a quality management department directly.
A conceptual framework (depicted in figure 1) was designed to test the hypotheses. This framework
consisted of eight independent and one dependent variables.
Dependent variable Y = Quality outcomes/benefits of organizations
Independent variables X1= Top management commitment
X2 Strategic quality planning process,
X3 Quality information and analysis,
X4 HRD,
X5 Quality assurances,
X6 Customer focus and satisfaction,
X7 Public responsibilities
X8 Benchmarking
The multiple regression equation estimated from sample data then took the following form
Yi = a +b1X1i+b2X2i+……………..+bkXki,
Multiple regressions used to test the model were conducted using SPSS. Three statistical procedures were
used to analyze the data, such as, descriptive statistics, Pearson product-moment correlation coefficients
and multiple regressions. In this study descriptive statistics were used to check variables for the violation
of normality distribution assumptions. The correlation matrix was calculated to determine the
relationship between dependent and independent variables and to determine the multicollinearity is a
problem for the model. A multiple regression analysis was used, to determine the effect of each
independent variable on quality outputs / benefits or model. The conceptual framework depicted in
Figure 1 is designed to guide the analysis presented in this study.
Insert figure 1 here

DATA ANALYSIS AND RESULTS

Relationship between TQM principles and quality outcomes or benefits

The relationship between total quality management (TQM)’s principles and quality outcomes of an
organization was investigated using Pearson product-moment correlation coefficient. The theoretical
model of TQM practices or implementation and overall business performance or development,
incorporate three hypotheses was tested simultaneously.
In correlation analysis between TQM principles and quality outcomes or benefits. Strategic quality
planning (r=0.361**), HRD (r=.352**), quality assurance (r=.449**), customer satisfaction (r=.298**) and
benchmarking (r=.587**) had positive and most effect on quality outcomes or benefits of organizations in
telecom industry of Pakistan. These TQM factors play significant role into the development of telecom
companies of Pakistan
Top management commitment (r=.145), quality information and analysis (r=.151), public responsibility
(r=.215*) had also positive but less effect on quality outcomes or benefits of telecom companies of
Pakistan. Benchmarking and quality assurance had strong positive effect on business performance of the
telecom companies of Pakistan and they play a significant role into the development of organization. This
mean, that there are positive relationship between all TQM principles and quality benefits of the
organizations. If TQM principles are implemented effectively more quality outcomes can be derived.

Relationship between benchmarking and customer satisfaction

There is strong positive relationship between benchmarking and customer satisfaction, (r=.534**).This
mean that benchmarking play a significant role in customer satisfaction, when companies will practice
benchmarking than quality will be improve and innovation will occur and in this way customer will be
more satisfied .
Insert table 1 here
This study attempts to answer two questions;
How well the eight measures of total quality management predict perceived quality benefits or outcomes
and how much variance in perceived quality benefits scores can be explained by scores on these eight

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scales? Secondly which variable is the best predictor of perceived quality benefits? To explore these
questions and test hypotheses; Standard multiple regression was considered an effective statistical
technique for data analysis. Preliminary analyses were performed to ensure no violation of the
assumptions of normality, linearity, and homoscedasticity

Quality benefits perceived by TQM variables in model

Model summary is presented in Table 2, R is called multiple correlation coefficient, measure the degree of
relationship between a variable and its estimate from the regression equation. Model of this study shows
that the R is .62, which mean, strong positive relationship between quality benefits and all TQM
principles or practices.
According to (Tabachnick and Fidell, 2001) to provide a better estimate of the true population value the
Adjusted R square statistics correct this value. If you have a small sample may wish to consider reporting
this value, rather than the Normal R square value.
R square is called coefficient of multiple determination and lies between 0 and 1. This tells how much of
the variance in the dependent variable (quality benefits) is explained by the model (which includes the
variables of Total quality management). In this study the value is .393. Expressed as a percentage
(multiply by 100, by shifting the decimal point two places to the right), this means that this model
explains 39.3 percent of the variance in quality benefits and outcomes.
Insert table 2 here
Table 3; present ANOVA to assess the statistical significance of the result. This tests the null hypothesis
that multiple R in the population equals 0.
The model in this study reaches statistical significance of .000, this really means p<.0005.
Insert table 3 here
A Predictors: (Constant), Benchmarking, Top Mgt, Quality inform and analysis, Public responsibility,
Strategic Quality planning, Quality Assurance, HRD, Customer Satisfaction
B Dependent Variable: Quality Outcomes or Benefits

Role of Benchmarking in TQM model

The next thing in this research is the need to know which variables included in the model contributed
more to the prediction of the dependent variable. That can be determined through the information given
in Table 4, labeled regression coefficients.
In this study interest is in comparing the contribution of each independent variable, by analyzing beta
values of standardized coefficients.
The largest beta coefficient is .471, which is for Benchmarking. This means that this variable makes the
strongest contribution to explaining the dependent variable, when the variance explained by all other
variables in the model is controlled for.
The Beta value for quality information and analysis is quite lower (-0.53), as compare to other variables.
To determine the statistically significant unique contribution of each variable to the equation, will check
the value in the column marked Sig. if the Sig value is less than .05(.01, .0001etc) then the variable is
making a significant unique contribution to the prediction of the dependent variable. If greater than .05
then can conclude that variable is not making a significant unique contribution to the prediction of
dependent variable. This may be due to overlap with other independent variables in the model. In this
case, benchmarking (.000) make a unique, and statistically significant, contribution to the prediction of
perceived quality benefits. Strategic quality planning is also make a unique and statistically significant,
contribution to the prediction of perceived quality benefits, at some extent, because its Sig value is 0.057.
Insert table 4 here
The results of the analyses presented above allow us to answer the two questions posed at the beginning
of this study.
Model of this study, which includes, top management commitment, strategic quality planning, quality
information and analysis, HRD, quality assurance, customer satisfaction, public responsibility,
benchmarking, explains 39.3 percent of the variance in perceived quality benefits (Question 1) and of
these eight variables, benchmarking makes the largest contribution (beta=.471), although strategic quality
planning process also made a statistically significant contribution (beta= .174) (Question 2)

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CONCLUSION

Before discussing the results obtained by the research methodology adopted. It is necessary to evaluate
this study in the context of its limitation. First, data used to test the theoretical models came from five
telecom service companies. So generalization is limited.
Second, the measure of top management commitment perceived is relatively weak, because it asked
respondents for their general perception of top management commitment in their respective
organization.
Third, all primary data were obtained from respondents through questionnaire. Response was on their
perceptions, thus research findings might have been biased. However these limitations in the study leave
future ground for explorations and research on the subject.
The result obtained from the questionnaire survey, which have a number of practical implications. All
three hypotheses were confirmed by the data. First, TQM practices or implementation has positive effects
on quality benefits for overall business performance. Second, benchmarking is the decisive factor in
determining the success of organizational overall business performance. Third, the research findings can
imply that it is not necessary for all TQM factors to be present to be ensuring the success of the TQM
programs and overall business performance, like top management commitment was too low in this
finding. Mean there was less impact of top management commitment on quality benefits as compare to
other variables or factors in telecom companies of Pakistan. In other words, even if a few elements are not
present, it is still possible to obtain the required level of overall business performance. This does not
mean that these elements are useless and have no value; instead organizations should identify the
problem areas of these elements and implement them more effectively.
Investing in TQM practices and implementation often requires a long term effort and a great deal of
energy, money, patience and management attention. Although this study is conducted for telecom
industry of Pakistan, organizations in other countries can also use it as reference, since the existing
quality management knowledge was used to develop conceptual frame work. Therefore, many principles
and practices presented in this study can be used for organizations in other countries. The fact is that the
basic philosophy of TQM is applicable to any type of organization. Some principles and practices
presented in the study are important and key to the success of any organization.
Finally, it was concluded that the TQM implementation and practices framework or model developed in
this study is applicable in practice and can describe how to improve their implementation and practices
efforts. For organizations that are planning TQM, the conceptual framework in this study provides
detailed information on the elements and practices of TQM and indicators of overall business
performance. Study can provide specific benefits of a number of TQM practices for organizations that
have not decided whether to implement TQM, and positively encouraging them in implementing TQM.
Since this study was conducted in Pakistan when almost the entire market had adopted itself to
globalization it will not be surprise to suggest that the research findings have global applicability apart
from being of use to the academics and business environment of Pakistan.

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Figure1.Conceptual Framework for TQM Practices and Benefit in Telecommunication Industry of

Pakistan

Top mgt Reduce scrap level

commitment

Reduce rework level

Strategic planning
for TQM
Increase productivity

Quality information
and analysis Reduce cost

-Achieved
Benchmarking
benefits or quality
outcomes
TQM
Quality assurance
Principles or Reduce customer
factors complaint
Customer focus
Enhance competitive
position

Public responsibility
Keep in business

HRD Increase profit

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Table 1: Correlation between TQM principles and quality outcomes or benefits

Strategi
Quality Top c Quality Custom
outcomes Mgt quality informati Quality er Public Bench
/ commit plannin on & Assura Satisfac respons markin
benefits ment g analysis HRD nce tion ibility g
Quality
Outcomes or
1
Benefits

Top Mgt
commitment
.145 1

Strategic
Quality
.361(**) .302(**) 1
planning

Quality
information &
.151 .165 .222(*) 1
analysis

HRD
.352(**) .175 .269(**) .380(**) 1

Quality
Assurance
.449(**) .171 .254(**) .153 .513(**) 1

Customer
Satisfaction
.298(**) .498(**) .183 .263(**) .436(**) .459(**) 1

Public
responsibility
.215(*) .324(**) .216(*) .081 .268(**) .271(**) .452(**) 1

Benchmarking
.587(**) .253(**) .362(**) .323(**) .541(**) .561(**) .534(**) .336(**) 1

** Correlation is significant at the 0.01 level (2-tailed).

* Correlation is significant at the 0.05 level (2-tailed).

Table 2: Model Summary

Adjusted R Std. Error of the
Model R R Square Square Estimate
1
.627(a) .393 .342 8.18551

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Table 3: ANOVA
Sum of Mean
Model Squares df Square F Sig.
1 Regression 4165.022 8 520.628 7.770 .000(a)
Residual 6432.240 96 67.002
Total 10597.262 104

Table 4: Regression Coefficients

Unstandardized Standardized
Model Coefficients Coefficients

B Std. Error Beta t Sig.

1 (Constant) 28.604 9.809 2.916 .004
Top Mgt commitment -.034 .108 -.030 -.316 .753
Strategic Quality
.170 .088 .174 1.927 .057
planning
Quality information
-.057 .097 -.053 -.592 .555
and analysis
HRD .004 .097 .005 .046 .963
Quality Assurance .139 .087 .167 1.607 .111
Customer Satisfaction -.040 .130 -.035 -.309 .758
Public responsibility .002 .063 .002 .026 .979
Benchmarking .439 .105 .471 4.177 .000

A Dependent Variable: Quality Outcomes or Benefits

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